Investors boost portfolios on predictions of further Fed stimulus
As yet more stimulus looks on the cards from the U.S. Congress and Federal Reserve, investors are taking action to buy stocks to boost their portfolios.
Indeed, the White House is pressing for stimulus checks, which we could see in July, and it is widely forecast that the Federal Reserve will prolong its unparalleled range of stimulus measures.
Following the coronavirus-fuelled panic that shook financial markets, they have been on a robust upward trajectory since the end of March, largely propelled by the record levels of stimulus.
Consequently, as it looks increasingly likely that the United States will receive another round of stimulus in the not-too-distant future – providing asset prices with a further boost – investors are now moving to buy stocks to strengthen their portfolios ahead of the looming announcement.
The Federal Reserve’s last expansion to its record-busting stimulus programme earlier this month acts as a so-called backstop or floor for equities.
The extra support from the Fed was widely predicted by the markets. Therefore, savvy investors who have been keeping a close eye on the situation have been recently boosting their portfolios as entry points will undoubtedly edge higher moving forward.
The Fed’s drive to support markets has functioned exceptionally well. As a result, there will inevitably be a call to halt the addition of further stimulus after the highly anticipated next round is announced.
Moreover, it is likely that this will spur on investors to seek out the opportunities. There are not many things that can drive markets like another injection of stimulus. As such, if the next round will be the last for some time, investors will want to make sure to get a piece of the action.
Of course, not all shares are created equal, so investors can consult a good fund manager to seek out those most likely to create and grow their wealth.
Nigel Green is CEO and founder of deVere Group, one of the world’s largest independent financial advisory and fintech organisations.